As filed with the Securities and Exchange Commission on March 30, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KOMAG, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 94-2914864
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1704 Automation Parkway, San Jose, CA 95131
(Address of principal executive offices) (Zip Code)
KOMAG, INCORPORATED
1997 SUPPLEMENTAL STOCK OPTION PLAN
(Full title of the Plan)
STEPHEN C. JOHNSON
President and Chief Executive Officer
1704 Automation Parkway, San Jose, CA 95131
(Name and address of agent for service)
(408) 576-2000
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered (1) per Share (2) Price Fee
---------- -------------- ------------- --------- ------------
Common Stock, 4,600,000 $15.22 $70,012,000 $20,653.54
$0.01 par value
================================================================================================================
<FN>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1997 Supplemental Stock
Option Plan by reason of any stock dividend, stock split,
recapitalization or any other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in
the number of Registrant's outstanding shares of Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the
high and low selling prices per share of Registrant's Common Stock on
March 24, 1998, as reported on the Nasdaq National Market.
</FN>
</TABLE>
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
Komag, Incorporated (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
a. The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1997 filed with the SEC on March 25,
1998.
b. The Registrant's Registration Statement No. 0-16852 on Form
8-A filed with the SEC on April 29, 1988 in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements of
Registrant filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "1934 Act") after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Restated Certificate of Incorporation provides that no
director of the Registrant will be personally liable to the Registrant or any of
its stockholders for monetary damages arising from the director's breach of
fiduciary duty. However, this provision does not apply with respect to any
action in which the director would be liable under Section 174 of Title 8 of the
General Corporation Law of Delaware, nor does it apply with respect to any
liability resulting from any transaction in which the director (i) breached his
duty of loyalty to the Registrant or its stockholders; (ii) did not act in good
faith or, in failing to act, did not act in good faith; (iii) acted in a manner
involving intentional misconduct or a knowing violation of law or, in failing to
act, acted in a manner involving intentional misconduct or a knowing violation
of law; or (iv) derived an improper personal benefit.
Pursuant to the provisions of Section 145 of the General Corporation
Law of Delaware, every Delaware corporation has power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant or of any corporation,
partnership, joint venture, trust or other enterprise for which he is or was
serving in such capacity at the request of the Registrant, against any and all
expenses, judgments, fines and amounts paid in settlement and reasonably
incurred by him in connection with such action, suit or proceeding. The power to
indemnify applies only if such person acted in good faith and in a manner he
reasonably believed to be in the best interests, or not opposed to the best
interests, of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
<PAGE>
The power to indemnify applies to actions brought by or in the right of
the corporation as well, but only to the extent of defense and settlement
expenses and not to any satisfaction of a judgment or settlement of the claim
itself, and with the further limitation that in such actions no indemnification
shall be made in the event of any adjudication of negligence or misconduct
unless the court, in its discretion, feels that in the light of all the
circumstances indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of the actions referred to
therein, such person is, pursuant to Section 145 of the Delaware General
Corporation Law, entitled to indemnification as described above. Section 145
also grants power to advance litigation expenses upon receipt of an undertaking
to repay such advances in the event no right to indemnification is subsequently
shown. A corporation may also obtain insurance at its expense to protect anyone
who might be indemnified, or has a right to insist on indemnification, under the
statute.
The Registrant has entered into indemnification agreements with its
then current directors and officers which provide for indemnification to the
fullest extent permitted by Delaware General Corporation Law, including Section
145 thereof.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit Number Exhibit
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-16852 on
Form 8-A which is incorporated herein by reference
pursuant to Item 3(b).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
23.2 Consent of Brobeck, Phleger & Harrison is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Komag, Inc. Supplemental Stock Option Plan.
99.2 Notice of Grant generally used in connection with the 1997
Supplemental Stock Option Plan.
99.3 Form of Stock Option Agreement generally used in
connection with the 1997 Supplemental Stock Option Plan.
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes: (1) to
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "1933
Act"), (ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement,
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into the
registration statement; (2) that for the purpose of determining any liability
under the 1933 Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold upon the termination of the Registrant's 1997 Supplemental Stock Option
Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into the Registration Statement shall
be deemed to be a new registration statement relating to the
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the 1933 Act may be permitted to directors, officers or controlling
persons of the Registrant pursuant to the provisions summarized in Item 6 or
otherwise, the Registrant has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933
Act, and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on this 26th day of March, 1998.
Komag, Incorporated
By _______________________________________________
Stephen C. Johnson
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Komag,
Incorporated, a Delaware corporation, do hereby constitute and appoint Stephen
C. Johnson and William L. Potts Jr., and each of them, the lawful attorneys and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and any one of
them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration
Statement, and to any and all instruments or documents filed as part of or in
conjunction with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
President, Chief Executive Officer March 26, 1998
- --------------------------- and Director (Principal Executive Officer)
Stephen C. Johnson
Chairman of the Board March 30, 1998
- ---------------------------
Tu Chen
Senior Vice President of Finance, March 26, 1998
- --------------------------- Chief Financial Officer and
William L. Potts, Jr. Secretary (Principal Financial
and Accounting Officer)
<PAGE>
Signatures Title Date
- ---------- ----- ----
- ---------------- Director March 27, 1998
Craig R. Barrett
- ------------- Director March 27, 1998
Chris A. Eyre
- -------------- Director March 27, 1998
Irwin Federman
- -------------- Director March 27, 1998
George A. Neil
- ------------ Director March 27, 1998
Max Palevsky
- ----------- Director March 27, 1998
Anthony Sun
- --------------------- Director March 27, 1998
Masayoshi Takebayashi
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
KOMAG, INCORPORATED
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-16852 on
Form 8-A which is incorporated herein by reference pursuant
to Item 3(b).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Auditors - Ernst & Young LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Komag, Inc. Supplemental Stock Option Plan.
99.2 Notice of Grant generally used in connection with the 1997
Supplemental Stock Option Plan.
99.399.3 Form of Stock Option Agreement generally used in connection
with the 1997 Supplemental Stock Option Plan.
EXHIBIT 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP.
March 25, 1998
Komag, Inc.
1704 Automation Parkway
San Jose, CA 95131
Re: Komag, Inc. - Registration Statement for Offering of
4,600,000 Shares of Common Stock
Dear Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 4,600,000 shares of
Common Stock of the Company available for issuance under the Komag, Inc. 1997
Supplemental Stock Option Plan ("the Plan"). We advise you that, in our opinion,
when such shares have been issued and sold pursuant to the applicable provisions
of the Plan, and in accordance with the Registration Statement, such shares will
be validly issued, fully paid and nonassessable shares of the Company's Common
Stock.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the
Registration Statement (Form S-8) pertaining to the Komag, Incorporated 1997
Supplemental Stock Option Plan, of our report dated February 27, 1998, with
respect to the consolidated financial statements and schedule of Komag
Incorporated included in its Annual Report (Form 10-K) for the year ended
December 28, 1997, filed with the Securities and Exchange Commission.
Ernst & Young LLP
San Jose, California
March 27, 1998
EXHIBIT 23.2
Opinion and Consent of Brobeck, Phleger & Harrison LLP
is contained in Exhibit 5.
EXHIBIT 24
Power of Attorney. Reference is made to page II-4 of
this Registration Statement.
EXHIBIT 99.1
Komag, Inc. 1997 Supplemental Stock Option Plan.
KOMAG, INCORPORATED
1997 SUPPLEMENTAL STOCK OPTION PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
This 1997 Supplemental Stock Option Plan (the "Plan") is
intended to promote the interests of Komag, Incorporated, a Delaware corporation
(the "Corporation"), by providing a method whereby eligible individuals may be
offered incentives and rewards which will encourage them to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation and continue to render services to the Corporation (or its parent or
subsidiary corporations).
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by one or more committees
comprised of Board members (the "Committee") or the Board may retain the power
to administer the Plan. The members of the Committee shall each serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time.
B. The Committee (or the Board if no Committee has been
designated) shall serve as the Plan Administrator and shall have full power and
authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of such program and to make such determinations under the program and any
outstanding option as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties with an interest in the
Plan or any options or shares issued hereunder.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to participate in the Plan shall be
- employees (excluding officers and directors) of the
Corporation (or its parent or subsidiary corporations),
- independent contractors and consultants of the
Corporation (or its parent or subsidiary corporations).
<PAGE>
B. The Plan Administrator shall have full authority to select
the eligible individuals who are to receive option grants under the Plan, the
number of shares to be covered by each granted option, the time or times at
which such option is to become exercisable and the maximum term for which the
option is to be outstanding.
C. For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a parent corporation of the Corporation, provided each
such corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a subsidiary of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The aggregate
number of shares which may be issued over the term of the Plan shall not exceed
Four Million Six Hundred Thousand (4,600,000) shares (subject to adjustment from
time to time in accordance with paragraph IV.C of this Article One).
B. Should an option be terminated for any reason prior to
exercise in whole or in part, the shares subject to the portion of the option
not so exercised shall be available for subsequent option grants under this
Plan. In addition, unvested shares issued under the Plan and subsequently
repurchased by the Corporation at the original exercise price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants under the Plan.
C. In the event any change is made to the Common Stock
issuable under the Plan (whether by reason of (i) merger, consolidation or
reorganization or (ii) recapitalization, stock dividend, stock split,
combination of shares, exchange of shares or other similar change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration), then unless such change results in the termination of all
outstanding options pursuant
<PAGE>
to the provisions of paragraph II of Article Two of the Plan, appropriate
adjustments shall be made to (i) the aggregate number and/or class of shares
issuable under the Plan, and (ii) the number and/or class of shares and price
per share in effect under each outstanding option under the Plan. The purpose of
such adjustments to the outstanding options shall be to preclude the enlargement
or dilution of rights and benefits under such options.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be
authorized by action of the Plan Administrator and shall be Non-Statutory
Options. The granted options shall be evidenced by instruments in such form as
the Plan Administrator shall from time to time approve; provided, however, that
each such instrument shall comply with and incorporate the terms and conditions
specified below.
A. Option Price.
1. The option price per share shall be fixed by the
Plan Administrator. In no event, however, shall the option price per share be
less than one hundred percent (100%) of the fair market value per share of
Common Stock on the date of the option grant.
2. The option price shall become immediately due upon
exercise of the option and shall be payable as follows:
(i) full payment in cash or check drawn to the
Corporation's order;
(ii) full payment in shares of Common Stock held
by the optionee for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting
purposes and valued at fair market value on the Exercise Date (as
such term is defined below) equal to the option price; or
(iii) full payment through a combination of shares
of Common Stock held by the optionee for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at fair market value on
the Exercise Date and cash or check, equal in the aggregate to
the option price.
(iv) to the extent the option is exercised for
vested shares, the option price may also be paid through a
broker-dealer sale and remittance procedure pursuant to which the
optionee shall provide irrevocable instructions to (I) a
Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of
the sale proceeds available on the settlement date, an amount
equal to the aggregate option price payable for the purchased
shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Corporation by
reason of such purchase and (II) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage
firm.
<PAGE>
For purposes of this subparagraph 2, the Exercise Date shall be
the date on which notice of the exercise of the option is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
3. The fair market value of a share of Common Stock
on any relevant date under
subparagraph 1 or 2 above (and for all other valuation purposes under the Plan)
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on
the Nasdaq National Market, then the fair market value shall be
the closing selling price per share of Common Stock on the day
prior to the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling
price for the Common Stock on the day prior to the date in
question, then the fair market value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on
either the New York Stock Exchange or the American Stock
Exchange, then the fair market value shall be the closing selling
price per share of Common Stock on the day prior to the date in
question on such exchange, as such price is officially quoted in
the composite tape of transactions on that exchange. If there is
no closing selling price for the Common Stock on the day prior to
the date in question, then the fair market value shall be the
closing selling price on the last preceding date for which such
quotation exists.
B. Term and Exercise of Options.
Each option granted under this Article Two shall be
exercisable at such time or times, during such period, and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
instrument evidencing such option; provided, however, that no option granted
under this Article Two shall have a maximum term in excess of ten (10) years
from the grant date.
<PAGE>
C. Limited Transferability of Options.
During the lifetime of the optionee, the option
shall be exercisable only by the optionee and shall not be assignable or
transferable by the optionee otherwise than by will or by the laws of descent
and distribution following the optionee's death. However, the Plan Administrator
may grant one or more options under this Article Two which may, in connection
with the optionee's estate plan, be assigned in whole or in part during the
optionee's lifetime to one or more members of the optionee's immediate family or
to a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
D. Termination of Service.
1. Should an optionee cease to remain in Service for
any reason (including death, permanent disability or retirement at or after age
65) while the holder of one or more outstanding options granted to such optionee
under the Plan, then such option or options shall not (except to the extent
otherwise provided pursuant to paragraph VII below) remain exercisable for more
than a twelve (12)-month period (or such shorter period as is determined by the
Plan Administrator and set forth in the option agreement) following the date of
cessation of Service; provided, however, that under no circumstances shall any
such option be exercisable after the specified expiration date of the option
term. Except to the extent otherwise provided pursuant to subparagraph I.D.4
below, each such option shall, during such twelve (12)-month or shorter period,
be exercisable for any or all vested shares for which that option is exercisable
on the date of such cessation of Service. Upon the expiration of such twelve
(12)-month or shorter period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be exercisable for any such vested
shares for which the option has not been exercised. However, the option shall,
immediately upon the optionee's cessation of Service, terminate and cease to be
outstanding with respect to any option shares in which the optionee is not
otherwise at that time vested or for which the option is not otherwise at that
time exercisable.
2. Should the optionee die while in Service, or cease
to remain in Service and thereafter die while the holder of one or more
outstanding options under the Plan, each such option may be exercised by the
personal representative of the optionee's estate or by the person or persons to
whom the option is transferred pursuant to the optionee's will or in accordance
with the laws of descent and distribution but, except to the extent otherwise
provided pursuant to subparagraph I.D.4 below, only to the extent of the number
of vested shares (if any) for which the option is exercisable on the date of the
optionee's death. Such exercise must be effected prior to the earlier
<PAGE>
of (i) the first anniversary of the date of the optionee's death or (ii) the
specified expiration date of the option term. Upon the occurrence of the earlier
event, the option shall terminate and cease to be exercisable.
3. If (i) the optionee's Service is terminated for
cause (including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement or any unauthorized disclosure or use of confidential
information or trade secrets) or (ii) the optionee makes or attempts to make any
unauthorized use or disclosure of confidential information or trade secrets of
the Corporation or its parent or subsidiary corporations, then in any such event
all outstanding options granted the optionee under the Plan shall terminate and
cease to be exercisable immediately upon such cessation of Service or (if
earlier) upon such unauthorized use or disclosure of confidential or secret
information or attempt thereat.
4. The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at the time
the optionee dies, retires at or after age 65, or ceases to remain in Service,
to establish as a provision applicable to the exercise of one or more options
granted under the Plan that during the limited period of exercisability
following death, retirement at or after age 65, or cessation of Employee status
as provided in subparagraph I.D.1 or I.D.2 above, the option may be exercised
not only with respect to the number of vested shares for which it is exercisable
at the time of the optionee's cessation of Service, but also with respect to one
or more subsequent installments in which the optionee would have otherwise
vested had such cessation of Service not occurred.
5. For purposes of the foregoing provisions of this
paragraph I.D (and all other provisions of the Plan),
- The optionee shall be deemed to remain in the
Service of the Corporation for so long as such individual renders
services on a periodic basis to the Corporation (or any parent or
subsidiary corporation) in the capacity of an Employee, a non-employee
member of the Board or an independent consultant or advisor.
- The optionee shall be considered to be an Employee
for so long as such individual remains in the employ of the Corporation
or one or more of its parent or subsidiary corporations, subject to the
control and direction of the employer not only as to the work to be
performed but also as to the manner and method of performance.
D. Stockholder Rights.
An option holder shall have none of the rights of a
stockholder with respect to any shares covered by the option until such
individual shall have exercised the option, paid the option price and been
issued a stock certificate for the purchased shares. No
<PAGE>
adjustment shall be made for dividends or distributions (whether paid in cash,
securities or other property) for which the record date is prior to the date the
stock certificate is issued.
E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise
of options granted under this Article Two may be subject to repurchase by the
Corporation in accordance with the following provisions:
The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.
All of the Corporation's outstanding repurchase
rights shall automatically terminate, and all shares subject to such terminated
rights shall immediately vest in full, upon the occurrence of any Corporate
Transaction under paragraph II of this Article Two, except to the extent: (i)
any such repurchase right is to be assigned to the successor corporation (or
parent thereof) in connection with the Corporate Transaction or (ii) such
termination is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
The Plan Administrator shall have the discretionary
authority, exercisable either before or after the optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the optionee under this
Article Two and thereby accelerate the vesting of such shares in connection with
the optionee's cessation of Service.
II. CORPORATE TRANSACTIONS
A. In the event of any of the following
stockholder-approved transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the
Corporation is not the surviving entity, except for a transaction
the principal purpose of which is to change the State of the
Corporation's incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation, or
(iii) any reverse merger in which the
Corporation is the surviving entity,
<PAGE>
then each option outstanding under this Article Two shall
automatically become exercisable, during the five (5) business day period
immediately prior to the specified effective date for the Corporate Transaction,
with respect to the full number of shares of Common Stock purchasable under such
option and may be exercised for all or any portion of such shares as fully
vested shares of Common Stock. An outstanding option under the Plan shall not be
so accelerated, however, if and to the extent (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof or (ii) the acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of grant.
B. Immediately following the consummation of the Corporate
Transaction, all outstanding options under the Plan shall, to the extent not
previously exercised or assumed by the successor corporation or its parent
company, terminate and cease to be exercisable.
C. Each outstanding option under this Article Two which is
assumed in connection with the Corporate Transaction or is otherwise to continue
in effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issuable, in consummation of such Corporate Transaction, to an
actual holder of the same number of shares of Common Stock as are subject to
such option immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities shall remain the same. In
addition, the class and number of securities available for issuance under the
Plan following the consummation of the Corporate Transaction shall be
appropriately adjusted.
D. Option grants under this Article Two shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
III. CANCELLATION AND REGRANT
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different numbers of
shares of Common Stock but having an exercise price per share equal to one
hundred percent (100%) of the fair market value of the Common Stock on the new
grant date.
<PAGE>
IV. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority,
exercisable from time to time in its sole discretion, to extend, either at the
time the option is granted or at any time while such option remains outstanding,
the period of time for which the option is to remain exercisable following the
optionee's cessation of Service or death from the twelve (12)-month or shorter
period set forth in the option agreement to such greater period of time as the
Plan Administrator shall deem appropriate; provided, however, that in no event
shall such option be exercisable after the specified expiration date of the
option term.
<PAGE>
ARTICLE THREE
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever.
However, no such amendment or modification shall, without the consent of the
holders, adversely affect rights and obligations with respect to options at the
time outstanding under the Plan.
II. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon its adoption by the
Board. Unless sooner terminated in accordance with paragraph II of Article Two,
the Plan shall terminate upon the earlier of (i) August 27, 2007 or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued or cancelled pursuant to the exercise or surrender of options granted
hereunder. If the date of termination is determined under clause (i) above, then
options outstanding on such date shall not be affected by the termination of the
Plan and shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.
III. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
IV. TAX WITHHOLDING
The Corporation's obligation to deliver shares or cash upon
the exercise or surrender of any option granted under the Plan shall be subject
to the satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
V. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing or
restating the Plan, nor any action taken by the Plan Administrator hereunder,
nor any provision of the restated Plan shall be construed so as to grant any
individual the right to remain in the employ or service of the Corporation (or
any parent or subsidiary corporation) for any period of specific duration, and
the Corporation (or any parent or subsidiary corporation retaining the services
of such individual) may terminate such individual's employment or service at any
time and for any reason, with or without cause.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the Corporation's
<PAGE>
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it and the stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
EXHIBIT 99.2
Notice of Grant generally used in connection with the 1997
Supplemental Stock Option Plan.
KOMAG, INCORPORATED
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Komag, Incorporated. (the
"Corporation"):
Optionee: ___________________________________________________________________
Grant Date: ________________________ Exercise Price: $_________per share
Option Type: Non-Statutory Stock Option Number of Option Shares:_____shares
Vesting Commencement Date: _________ Expiration Date: ________________
Exercise Schedule: The Option shall become vested and exercisable for
twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the Grant Date and
shall become exercisable for the balance of the Option Shares in
thirty-six (36) successive equal monthly installments upon Optionee's
completion of each additional month of Service over the thirty-six (36)
month period measured from the first anniversary of the Grant Date.
Optionee understands and agrees that the Option is granted subject to and in
accordance with the terms of the Komag, Incorporated 1997 Supplemental Stock
Option Plan (the "Option Plan"). Optionee further agrees to be bound by the
terms of the Option Plan and the terms of the Option as set forth in the Stock
Option Agreement (the "Option Agreement") referenced herein. Optionee assumes
responsibility for reviewing the official prospectus for the Plan, and Stock
Option Agreement on Komag's Public File Server at KUS1\VOL1\KOMAG in the folder
titled STKINFO:
Plan summary and Prospectus file named OPSCT97.DOC
Plan Stock Option Agreement file named OPAGR97.DOC
Copies of these documents are also available upon request from the Stock Plan
Administrator.
No Employment or Service Contract. Nothing in this Notice or in the attached
Option Agreement or in the Plan shall confer upon Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the referenced Option Agreement.
______________
Date
KOMAG, INCORPORATED
By: _______________________________ Optionee:_____________________________
Title: ____________________________ Date:_________________________________
EXHIBIT 99.3
Form of Stock Option Agreement
generally used in connection with the 1997 Supplemental Stock Option Plan.
EXHIBIT A
KOMAG, INCORPORATED
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Corporation's Board of Directors (the "Board") has
adopted the Corporation's 1997 Supplemental Stock Option Plan (the "Plan") for
the purpose of attracting and retaining the services of employees and
consultants of the Corporation and its parent or subsidiary corporations.
B. Optionee is an individual who is to render valuable
services to the Corporation or its subsidiaries, and this Agreement is executed
pursuant to and is intended to carry out the purposes of the Plan in connection
with the Corporation's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, the Corporation hereby grants to
Optionee, as of the grant date (the "Grant Date") specified in the accompanying
Notice of Grant of Stock Option (the "Grant Notice"), a stock option to purchase
up to that number of shares of the Corporation's Common Stock (the "Option
Shares") as is specified in the Grant Notice. Such Option Shares shall be
purchasable from time to time during the option term at the option price (the
"Option Price") specified in the Grant Notice.
2. Option Term. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the expiration date (the "Expiration Date") specified in
the Grant Notice, unless sooner terminated in accordance with Paragraph 5 or
subparagraph 7(c).
3. Limited Transferability. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
<PAGE>
4. Dates of Exercise.
(a) Except as otherwise provided in this Paragraph 4 or in
subparagraph 7(a), this option shall become exercisable for the Option Shares in
one or more installments in accordance with the exercise schedule specified in
the Grant Notice. As this option becomes exercisable for such installments,
those installments shall accumulate, and this option shall remain exercisable
for the accumulated installments until the expiration or sooner termination of
the option term.
(b) As of the thirty-first (31st) day following the
commencement date of any unpaid leave of absence authorized by the Plan
Administrator (or its delegate) in writing, the exercise schedule in effect for
this option shall automatically be suspended, and the option shall not become
exercisable for any additional Option Shares, until such time as the Optionee
returns to active Service, provided such return to active Service occurs on or
before the authorized expiration date of the leave. Upon such return to active
Service, the exercise schedule for this option shall be reinstated as of the
point where the suspension occurred, and this option shall thereafter become
exercisable for one or more additional Option Shares under the reinstated
exercise schedule over the Optionee's period of subsequent Service and shall
remain so exercisable until the expiration or sooner termination of the option
term.
5. Termination of Service. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except to the extent otherwise provided in
subparagraphs (ii) through (iv) below, should Optionee cease to remain
in Service at any time during the option term, then this option shall
not remain exercisable for more than a thirty (30)-day period
commencing with the date of such cessation of Service. Upon the
expiration of such thirty (30)-day period or (if earlier) upon the
specified Expiration Date of the option term, this option shall
terminate and cease to be outstanding.
(ii) Should Optionee die while in Service or within the
thirty (30)-day period following his or her cessation of Service, then
the personal representative of the Optionee's estate or the person or
persons to whom this option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution shall
have the right to exercise the option. Such right shall lapse, and this
option shall terminate and cease to remain exercisable, upon the
earlier of (A) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee become permanently disabled and
cease by reason thereof to remain in Service at any time during the
option term, then this option shall not remain exercisable for more
than a twelve (12) month period commencing with the date of such
cessation of Service. Upon the expiration of such limited period of
exercisability or (if earlier) upon the Expiration Date, this option
shall terminate and cease to be outstanding.
<PAGE>
(iv) Should (A) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (B) the Optionee make any
unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations,
then in any such event this option shall terminate immediately and
cease to be exercisable.
(v) In no event shall this option be exercisable at any
time after the specified Expiration Date of the option term.
(vi) During the limited post-Service period of
exercisability determined in accordance with subparagraphs (i) through
(iii) above, this option may not be exercised for more than the number
of Option Shares (if any) for which this option is, at the time of the
Optionee's cessation of Service, exercisable in accordance with either
the normal exercise provisions specified in the Grant Notice or the
special acceleration provisions of Paragraph 7 of this Agreement.
However, should Optionee's Service be terminated by reason of death,
then this option may also be exercised, during the applicable period of
exercisability provided under subparagraph (ii) or (iii) above, for any
or all additional Option Shares for which this option would have
otherwise become exercisable had the Optionee continued in Service
through the last date of the installment exercise schedule specified
for this option in the Grant Notice. Upon Optionee's cessation of
Service for any reason other than death, this option shall immediately
terminate and cease to be outstanding with respect to any Option Shares
for which this option is not otherwise at that time exercisable.
(vii) For purposes of this Paragraph 5 and for all other
purposes under this Agreement, the following definitions shall be in
effect:
A. The Optionee shall be deemed to remain in the
Service of the Corporation for so long as such individual renders
services on a periodic basis to the Corporation (or any parent or
subsidiary corporation) in the capacity of an Employee, a non-employee
member of the Board or an independent consultant or advisor.
B. The Optionee shall be deemed to be an Employee for
so long as such individual remains in the employ of the Corporation or
one or more of its parent or subsidiary corporations, subject to the
control and direction of the employer not only as to the work to be
performed but also as to the manner and method of performance.
C. The Optionee shall be deemed to be permanently
disabled or have incurred a permanent disability if the Optionee is, by
reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of not less
than twelve (12) consecutive months or more, unable to engage in any
substantial gainful activity.
D. Each corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation shall
be considered to be a
<PAGE>
subsidiary of the Corporation, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the time of
the determination, stock possessing fifty percent(50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
E. Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a parent corporation of the Corporation, provided each
such corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
F. An unpaid leave of absence which has been
authorized by the Plan Administrator in writing shall not constitute a
cessation of Optionee's Service, provided Optionee returns to active
Service on or prior to the authorized expiration date of such leave.
6. Adjustment in Option Shares. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Option Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
7. Corporate Transaction.
(a) In the event of one or more of the following
stockholder-approved transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Corporation's
incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation or
(iii) any reverse merger in which the
Corporation is the surviving entity,
this option, to the extent outstanding at such time but not
otherwise fully exercisable for all the Option Shares (in accordance with the
installment exercise schedule set forth in the Grant Notice or the provisions of
Paragraph 5 above), shall automatically accelerate so that such option shall,
during the five (5) business day period immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to all the Option Shares and may be exercised for all or any portion of
those shares as fully-vested shares. No such acceleration of this option,
however, shall occur if and to the extent this option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof. The determination
of
<PAGE>
option comparability shall be made by the Plan Administrator, and such
determination shall be final, binding and conclusive.
(b) Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with the
Corporate Transaction. The Corporation shall use its best efforts to (i) provide
the Optionee with at least ten (10) days prior written notice of the specified
effective date for the Corporate Transaction and (ii) have the option assumed by
the successor corporation or its parent company, to the extent not exercised in
connection with such Corporate Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
(d) This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this option
shall not have any of the rights of a stockholder with respect to the Option
Shares until such individual shall have exercised the option in accordance with
the provisions of Paragraph 9, paid the Option Price for the purchased shares
and been issued a stock certificate for such shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, the Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Deliver (A) an executed notice of stock option
exercise (the "Exercise Notice") to the Stock Administrator of the Corporation
in which there is specified the number of Option Shares to be purchased under
the exercised option and (B) any additional documents which the Plan
Administrator may, in its discretion, deem advisable.
(ii) Pay the aggregate Option Price for the purchased
shares through one or more of the following alternatives:
A. payment in cash or by check payable to the Corporation's
order;
B. payment in shares of Common Stock of the Corporation held
by the Optionee (or any other person exercising this option) for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date (as such terms are defined below);
<PAGE>
C. payment effected through a broker-dealer sale and
remittance procedure pursuant to which the Optionee shall provide
irrevocable written instructions (I) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds available on the
settlement date, an amount equal to the aggregate Option Price payable
for the purchased shares plus all applicable Federal and State income
and employment taxes required to be withheld by the Corporation by
reason of such purchase and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option, if other than Optionee, have
the right to exercise this option.
(b) For purposes of subparagraph 9(a) above (and all other
valuation purposes hereunder), the Fair Market Value per share of Common Stock
on any relevant date shall be determined in accordance with subparagraphs (i)
and (ii) below, and the Exercise Date shall be the date on which the following
documents shall have been delivered to the Corporation (I) the Exercise Notice
and any additional documents required by the Corporation in connection with the
option exercise and (II) any representations which the Corporation may require
of the Optionee in order to comply with the applicable requirements of Federal
and State securities laws.
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the day prior to the date in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
the day prior to the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on either
the New York Stock Exchange or the American Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of
Common Stock on the day prior to the date in question on such exchange,
as such price is officially quoted on the composite tape of
transactions on that exchange. If there is no closing selling price for
the Common Stock on the day prior to the date in question, then the
Fair Market Value shall be the closing price on the last preceding date
for which such quotation exists.
(c) This option shall be deemed to have been exercised with
respect to the number of Option Shares specified in the Exercise Notice at such
time as the Exercise Notice shall have been delivered to the Corporation. Except
to the extent the special payment procedure specified in clause (C) of Paragraph
9 is used, payment of the Option Price shall accompany the Exercise Notice. As
soon as practical after receipt of the Exercise Notice, the Corporation shall
mail or deliver (including by electronic transmission) to or on behalf of
Optionee (or his representative) or to any other person or persons exercising
this option in accordance herewith, appropriate documentation evidencing
ownership of the shares for which the option has been so exercised.
(d) In no event shall this option be exercisable for any
fractional shares.
<PAGE>
10. Compliance with Laws and Regulations. The exercise of this
option and the issuance of Option Shares upon such exercise shall be subject to
compliance by the Corporation and the Optionee with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange on which shares of the Corporation's Common Stock may be listed at the
time of such exercise and issuance.
11. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 3 or Paragraphs 7, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs and legal representatives of Optionee and the successors and assigns of
the Corporation.
12. Liability of Corporation.
(a) If the Option Shares covered by this Agreement exceed, as
of the Grant Date, the number of shares which may without stockholder approval
be issued under the Plan, then this option shall be void with respect to such
excess shares unless stockholder approval of an amendment sufficiently
increasing the number of shares issuable under the Plan is obtained in
accordance with the provisions of the Plan.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained.
13. No Employment/Service Contract. Except to the extent the
terms of any employment or other service contract with the Optionee may
expressly provide otherwise, nothing in this Agreement or in the Plan shall
confer upon Optionee any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any parent or subsidiary employing or retaining Optionee) or of
Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason, with or without cause.
14. Notices. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of its Stock Administrator at its corporate
offices. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated for Optionee on the
Corporation's books and records. All notices shall be deemed to have been given
or delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
16. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California.
<PAGE>
17. Withholding. Optionee hereby agrees to make appropriate
arrangements with the corporation employing or retaining Optionee for the
satisfaction of any federal, state or local income tax withholding requirements
and federal social security employment tax requirements applicable to the
exercise of this option.
